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Friday, October 3, 2014

Emergency procurement: the last refuge of the sole source scandal

Pearson Lands Common-Core Contract in Mississippi After Testing Standoff
Mississippi officials have approved an "emergency procurement" contract with Pearson to administer common-core tests for the coming academic year—a step taken after a state board questioned the legality of the business arrangement and refused to sign off on it.

The one-year deal, which state officials said is worth $8.3 million, comes on the heels of the state's personal service contract review board telling the state department of education that it would reject a proposed, sole-source, four-year agreement because it believed competing proposals should have been sought from other vendors.

"To be approved as a sole source and awarded without competition, the service must be available from only a single supplier," said Deanne Mosley, executive director of the Mississippi state personnel board, which supports the contract review board, in a statement. "The company selected by New Mexico officials is not the only company which can provide these services."

Because of the board's stance, department of education officials say they had little choice but to approve the one-year contract to ensure that a portion of the state's schools, scheduled to give tests in December, could do so. The other options would have been to put forward competitive sealed bids or proposals, the agency said.

The board's decision angered department officials, who released a timeline of what they described as a lengthy and persistent effort to win approval of the contract.

The dispute in Mississippi has ties to a broader fight over a PARCC contract out of the state of New Mexico, a fracas that Education Week has been following closely.

In April, New Mexico officials approved a contract for PARCC test administration with Pearson, the only bidder on the project. A rival vendor, the American Institutes for Research, protested the bidding process, arguing that it improperly favored Pearson by bundling testing work that company was already providing PARCC with future duties administering the exam. AIR later sued in state court to stop the deal. After its appeal was rejected this summer by New Mexico's state procurement office, the AIR scaled back its legal fight. It is now suing to try to limit the scope of the contract to one year, and to have the remainder of the deal, which it says could last either four or eight years, re-bid.

Why does a deal hatched in New Mexico matter in Mississippi? The New Mexico contract establishes a price agreement with Pearson, which other PARCC states, including Mississippi can latch onto, if they want.

(The overall financial stakes of that Pearson vs. AIR fight could be massive in scale: In court documents, the AIR has said that if other PARCC states procure services for testing through the New Mexico deal, the contract could be worth $1 billion.)

Mississippi department of education officials, in statements, have argued that they have followed the proper process, over a period of several months, in seeking a sole-source contract with Pearson.

In their timeline describing those efforts, department officials said things were rolling along until they began meeting resistance from the contract review board.

Last month, when Mississippi's contract-review board told the department of education that the Pearson contract would not be heard by the board until September, the agency reacted with alarm—fearing the delay would jeopardize tests slated to be given to about 16,000 students in Mississippi schools later this year.

Mosley, in a statement, said that the contract-review board, after evaluating the New Mexico deal, became convinced it did not meet the legal standards of her state. Department officials had not shown that Pearson was the only company that could carry out the testing job, said Mosley, whose office declined further comment to Education Week.

"[I]t could not be approved as a legal and proper expenditure of taxpayer funds as it did not follow Mississippi procurement laws," Mosley said. "The New Mexico officials who selected this vendor to receive the contract did not take that into account and did not follow Mississippi laws in place to protect Mississippi taxpayers."

The department of education, however, disagrees.
A foundational principle of procurement is competition. As the Guam procurement law says (5 GCA § 5001(b)(6)), following ABA Model Procurement Code guidance, the state should "foster" competition. The first rule of Guam law is that the principles of procurement should be construed and applied to give effect to the laws. (§ 5001(a).) Thus, given a choice of 2 ways to assess a situation, the way the that gives effect to competition should be preferred to the way that does not. Giving away a contract by sole source when there is any question of availability of competition violates this first law.

Furthermore, Guam law understands that "emergency" is not a failure of planning, as does Federal law. Under Guam law, "emergency" is defined a "a condition posing an imminent threat to public health, welfare, or safety which could not have been foreseen through the use of reasonable and prudent management procedures...." (§ 5030(x).) Further, the emergency method of source selection requires "emergency procurements shall be made with such competition as is practicable under the circumstances" and limits the scope of the acquisition to "an amount of goods or supplies [not] greater than the amount of such goods and supplies which is necessary to meet an emergency for the thirty (30) day period immediately following the procurement". (§ 5215)

At the federal level, use of sole source, described under the general description as "Other Than Full and Open Competition" (see FAR SubPart 6.3), requires particular scrutiny and written justification. In particular, Subpart 6.301(c)(1), says "Contracting without providing for full and open competition shall not be justified on the basis of— (1) A lack of advance planning by the requiring activity...." Also see Part 7 for a description of planning principles and rules aimed to promote competition and Part 10, which requires market research to, among other goals, "Determine if sources capable of satisfying the agency’s requirements exist" (Subpart 10.001(a)(3)(i)).

None of that seems to have bothered the decision makers in the instances reported above.

Avoiding sole source scandals is such an easy step. Don't use it: just do the planning and market research, put a competitive method of source selection out, actually foster competition, and see what you get.

Oh, and provide incentive to do so.  Guam has an "ENFORCEMENT OF PROPER GOVERNMENT SPENDING" Act.   Under the act, any taxpayer has standing to bring action against any government officer or employee, including the governor, to recover for the government purse, any funds expended "without proper appropriation, without proper authority, illegally, or contrary to law."  (§ 7103.)

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